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Like yesterday, I continue to favor locking as mortgage rates are holding steady near historically low levels. If you wish to float in hopes of rates dipping further, keep an eye on stocks. If stocks move higher, rates will move higher. If stocks sell-off, rates will either hold at present levels or decline further. There isn’t much room for rates to move lower, so there is more risk involved in floating compared to the rewards of floating. Remember, mortgage rates always rise much faster than they decline. The only borrowers who should be waiting to lock are those who are close to being able to get 15 day pricing or 30 day pricing as opposed to 30 or 45 day pricing. If you are one of these folks, you might want to consider locking before the Employment Report is released on Friday morning. Economists say that May was a strong month for the labor market. If the report is as expected, it will likely drive mortgage rates higher. ...

The week ahead is fairly light on economic data with the highest impacting events coming starting on Tuesday with the release of the minutes of the most recent FOMC meeting. These meeting notes will be scoured by market participants for any insight into future monetary policy and their outlook on the economy. The bond market will be searching for signs of a slow economic recovery while stock traders will be checking for optimism in the macroeconomic outlook. . ...

Reports from fellow mortgage professionals indicate lender rate sheets to be similar to yesterday’s...again. This keeps the par 30 year conventional rate mortgage in the 4.75% to 5.00% range for well qualified consumers. To secure a par interest rate you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including an estimated one point loan origination/discount/broker fee. My lock advice will be the same as yesterday. I feel 4.75% is the bottom we will see with mortgage rates. If you are within 30 days of closing, you should strongly consider locking as we believe mortgage rates will be on the rise in the months to come. ...

Reports from fellow mortgage professionals indicate the par 30 year conventional rate mortgage remains in the 4.50% to 4.75% range for well qualified consumers. There are, HOWEVER, several lenders rewarding high FICO, low LTC borrowers with 4.375% rates. To secure a par interest rate you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs associated with the loan including an estimated one point loan origination/discount/broker fee. If you are seeking a 15 year term, you should expect a par rate between 4.00% to 4.25% with similar costs. While AQ and MG do believe that benchmark rates have room to fall further, we all agree that mortgage rates are not likely to continue to decline. That said, I continue to recommend locking over floating. At this point we are seeing about the best rates in history and lenders continue to be reluctant to offer lower rates. ...

Last week ended on positive note for mortgage backed securities and mortgage rates. As stock indexes fell, market participants re-allocated portfolios from risky assets to safer investments, resulting in added demand for government AAA rated fixed income securities. The benchmark 10 yr Treasury note moved back under 3.40% and MBS closed near their best levels in the past few weeks. Most lenders repriced for the better. Following the release of today’s data, MBS have moved off their recent price highs but continue to hold near the high side of current trading range which I have used to recommend locking or floating. Considering MBS prices are still close to recent highs it makes more sense to lock rather than float, so I would advise anyone closing within the next week to go ahead and lock to remove all chances of a spike higher in mortgage rates....